All sectors of farming are performing well at the present time, according to Ulster Bank’s Head of Agriculture Cormac McKervey.
“Milk prices remain strong, as do those for beef cattle and pigs,” he said.
“The poultry sector continues to remain buoyant. There is little doubt that the ongoing dry spell will serve to reduce cereal yields. However, strengthening grower prices will help compensate for this. Sheep prices have slipped a little bit over recent weeks. But this is a supply:demand issue.
“Taken overall there is no sector within agriculture that is giving the bank any cause for concern at the present time.”
Mr McKervey noted that land prices had strengthened considerably since the beginning of 2018.
“This follows a period of two years or so when land returns had plateaued. The current buoyancy within agriculture is giving both farmers and investors the confidence to invest in land once again.”
But, from a land rental point of view, McKervey said that the continuing reliance on conacre remains a cause for concern.
“Northern Ireland is almost unique in operating a conacre system,” he added.
“Yes it constitutes a straightforward, one-year rental agreement. But this is also its great weakness.
“In almost all other mature agricultural economies, long-term land rental schemes are the order of the day. And we need to see progress to this end made in this part of the world.
“Such arrangements give all the parties involved, the land owner, the leasee and the banks, much more confidence with regard to the plans that have been put in place for the respective businesses.
“Some landowners seem to think that they will lose out from an inheritance tax point of view, if they go down the longer term rental arrangement. But this is not the case.”
Turing to the impact of the weather, the Ulster Bank representative said that second cut silage yields are down, compared with 2017.
“But on the plus side, many farmers have been able to make high quality hay this year. They have also been able to make silage in fields that have been inaccessible to them for the past couple of years. All off this is extremely positive.”
Mr McKervey said that DAERA and AFBI are working hard to help ensure the debate on ammonia is driven by science and hopefully will soon be in a position to help farmers with their development decisions.
“The current lack of scientific trial work here in Northern Ireland on the subject has had an impact on the planning process, where farm development projects are concerned,” he added.
“In quite a number of cases, clients committed to expansion are now simply committing to a scale of development that keeps them below the planning threshold.
“But this is an extremely inefficient way of developing a farm business.”
Looking to the future, Mr McKervey could see very few darks clouds on the horizon for agriculture in Northern Ireland.
“Brexit is not really a threat as the instability inherent with the entire process has been with us for the past two years,” he explained.
“My one concern is that the themes agreed by Theresa May’s government at Chequers could deliver a soft Brexit.
“While it’s welcome that the Chequers’ Brexit proposal should lead to a softer Brexit there is some concern that the pound will strengthen and in turn make our exports less competitive.”